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Chen Xian: What is the secret to the success of innovative cities?

Office of Alumni and External Relations 2019-10-21

In addition to the Schumpeterian entrepreneurial innovation, innovation now also includes technological innovation. Talents are needed for innovation, and it is not difficult to find that cities that are more successful in innovation tend to be or used to be the cities of immigrants. This is really a common phenomenon. Immigrants have much in common with pioneers and entrepreneurs, including the spirit of adventure and the desire to make a difference. Therefore, those who have greater probability to innovate successfully tend to be immigrants.

 

Capitalism In America: A History, co-authored by Alan Greenspan, Chair of the Federal Reserve for nearly two decades, has backed up this judgment with some data.

 

In the 19th century, the population of the United States nearly increased 15-fold, from 5.3 million to 76 million. This population, larger than that of any single country on the European continent (except Russia), was certainly not the product of breeding only. By 1890, 80% of New York citizens and 87% of Chicago citizens were immigrants or descendants of immigrants. The entrepreneurship success for either immigrants or locals depends on a probability, but it is an indisputable fact that the probability of the former is much higher than the latter.

 

The percentage of immigrants or descendants of immigrants in the well-known entrepreneurs in the United States is striking. As of 2010, 18% of Fortune 500 companies (including AT&T, DuPont, eBay, Google, Kraft, Heinz and P&G) were founded by immigrants, and if you add in the companies founded by the descendants of immigrants, this figure should be more than 25%.

 

Immigrants’ own spirit of adventure and desire for success, plus the extremely inclusive diverse cultures brought by them, provide unique and hard-to-replicate advantages for the formation of an ecosystem of entrepreneurship and innovation.

 

Shenzhen is a typical example. This special zone is built up from nothing, which determines Shenzhen’s unique system and large-scale immigration. It is the immigrants that have created a large number of innovative companies, a sound ecology for innovation, and even a unique culture of innovation. What Shenzhen has achieved in the past four decades, especially the crowd of leaders in strategic emerging industries, speaks for itself.

 

People may ask what about cities without mass migration, since it’s not common. Or, where do the entrepreneurship and innovation talents come from in the new era? The answer is definite and unique: from higher education institutions, both regular and vocational universities and colleges, and especially from the first-class universities.

 

Good universities can attract a lot of well-educated immigrants from other cities. The most important reason why Beijing is doing so well in entrepreneurship and innovation is that the city is home to a large number of good universities. For more than a decade, several cities in Southern China including Hangzhou, Chengdu, Nanjing, Changsha, Wuhan and Hefei have stood out in entrepreneurship and innovation and emerging industries, which would be impossible without good universities. In addition, an increasing number of graduates choose to stay in the cities where their universities locate.

 

According to statistics, about one third of graduates from USTC choose to stay in Hefei after graduation now, compared with no more than 10% previously. Moreover, it’s said that 90% of graduates from UESTC will stay in Chengdu for employment after graduation now, compared with only 10% before. In the south central part of China, Changsha and Nanchang are not far apart, with similarities in most development conditions. But why can Changsha stand out? And why has Nanchang yet to rise? A plausible answer is that Changsha has good universities but Nanchang has basically none. Good universities bring a certain scale of immigration, which plays an irreplaceable role in entrepreneurship and innovation.

 

And certainly, a good university must interact with a good innovation ecology (including entrepreneurial ecology and industrial ecology). Which of the two is fundamental may be a matter of opinion. As far as I can see, a good university is more fundamental, otherwise, it will be just like water without a source. Good universities are actually one of the important participants of the innovation ecology. For example, in Silicon Valley, Stanford University was founded way ahead of the Science Park next to it.

 

However, the innovation ecology is also crucial. Take Shenzhen as an example, although it had no good universities over a long time, the city has attracted mass migration and filled the gap caused by the lack of good universities by virtue of its identity as a special zone and its relatively optimal innovation ecology. Today, Shenzhen is more enthusiastic than any other cities to run good universities because it has realized that the era of mass immigration has gone, and only good universities can attract a certain size of immigration now. If local governments are farsighted and pay equal attention to good universities and innovation ecology, they are bound to make achievements in entrepreneurship and innovation and the development of emerging industries.